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Location: When you take flak it means you are on target
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I always buy it, even though I do my own title searches (in addition to the title co). It's $300 or so. I've never needed it. I would never be without it.
The title insurance on our GFE is listed at $1,635 for the buyer and lender portions, on a home with a sales price of 107,000 (Homepath property). Does this sound right?
I have always suspected this is one of the better junk fees loaded onto the unsuspecting homeowners HUD, and is totally US specific. RE transactions in the UK or France (both places where I have sold/bought property) do not have such a thing. Honestly if the titling was done properly at the time of closing ,there would be no question over the title. In the uK the transfer of title is done by a lawyer, not a clerk, and as such there is a lot more care and diligence taken.
Also it would be far too sensible for those involved in investigating the title to be the ones who carry the insurance, against any and all problems that might appear later, rather than both the buyer and lender taking insurance, that seems banal to me.
Finally I would be very interested to know the % of titles that, after closing, have some sort of issue in which the insurance is actually used. Again my suspicion is it is a fraction of a %.
Total. Junk. Fee. But of course you have to play by the rules, so most have to pay it.
Last edited by timfountain; 05-05-2011 at 09:23 AM..
The title insurance on our GFE is listed at $1,635 for the buyer and lender portions, on a home with a sales price of 107,000 (Homepath property). Does this sound right?
I am guessing you live in Illinois given your handle. I can quote you what it would cost in New Jersey, but every state has their own rates regulated by their respective Departments of Banking and Insurance. In NJ, your cost would be around $998.00. Do you have an attorney handling your closing or is the title/settlement agency doing that for you? If you don't have an attorney, part of your fee might be for settlement services. Also, each state has different stamp/intangible taxes or recording fees (for deed and mortgage) - are those itemized separately on your GFE?
In answer to the initial question about whether to get owners title insurance when you buy or not, the choice might not be yours anyway. If you are taking out a mortgage to purchase, you will have to get a loan policy for the bank up to the amount of their mortgage anyway. If you are borrowing 80% to 90% of the purchase price anyway, you might as well just get an owners policy anyway. To be clear, when you get a simultaneous loan policy when you purchase, you should not have to pay a separate premium. I can only speak with authority for title insurance in New Jersey, but if you buy a property for say $350K and borrower $290K, the bank will get a loan policy in the amount of $290K for a title insurance 'simultaneous issue' fee of $25.00. You pay the full premium on the $350K for your owners policy and an extra $25.00 bucks for the bank's policy.
The risk you run by not having an owners policy when you purchase is if something was done wrong earlier in the chain of title (by the people who owned before you). This can be as simple as a mortgage never getting paid off correctly. Once you take title, you could suddenly find yourself being foreclosed upon due to that mortgage never being properly released. Your owner's policy would protect you from this. The difficulties could be less obvious than this, however. Lets say that a previous owner died and left the property to three children who then in turn sold the property to a new owner (assume all of this was either the previous owner or a few owners back). Only two of the children sign the deed conveying the property to the new owner - that third kid could decide one day he has a claim in that his interest in the property was never properly addressed. A title agency is supposed to catch issues like this prior to closing and alert all parties, fix the issue if possible, and issue you a policy protecting you from any of these contingencies.
I am guessing you live in Illinois given your handle. I can quote you what it would cost in New Jersey, but every state has their own rates regulated by their respective Departments of Banking and Insurance. In NJ, your cost would be around $998.00. Do you have an attorney handling your closing or is the title/settlement agency doing that for you? If you don't have an attorney, part of your fee might be for settlement services. Also, each state has different stamp/intangible taxes or recording fees (for deed and mortgage) - are those itemized separately on your GFE?
Yes, IL and we have an attorney.
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